EMA and ADX trend filter
Combines direction from an EMA with a non-directional trend-strength filter.
Keep the chart simple
What needs to be in place first
- Price is on the declared EMA side
- ADX exceeds or rises through a fixed rule
- Only closed bars are read
See ema and adx trend filter from both sides
Choose a direction and follow the chart from setup to entry, stop and planned exit. The method stays the same; only the directional comparisons reverse.
Entry is above the trigger, invalidation is below the setup and a profit exit is above the entry.
- EEntryLONG ENTRY / NEXT H4 OPEN
- SStop / risk limitLONG STOP / 1.5 ATR
- TTargetLONG TARGET / 2R
EMA(50) supplies direction, ADX gates strength, +DI/−DI supplies directional pressure and price closes beyond the prior two-bar boundary. The next H4 open is the entry, 1.5 ATR is the fixed stop and 2R is the planned target.
High ADX without +DI above −DI does not qualify the long direction; the price boundary must also close cleanly.Check the market first
Long: completed close is above EMA(50), +DI is above −DI, ADX(14) is at least 25 and exceeds its previous-bar value; reverse price and DI for short.
Wait for the entry rule
Enter at the next H4 open after the eligible boundary close.
Place the stop before entry
Stop 1.5 × ATR(14) from fill. Risk 0.50% equity and round down to 0.01 lot.
Know how the trade ends
Take profit at 2R. Exit early at next open after a completed close crosses EMA(50) against the position.
Worked example: EMA(50) direction with ADX strength
This version of EMA and ADX trend filter chooses one answer for every decision so you can repeat it. Treat the settings as a starting point to test, not as proven or recommended parameters.
EUR/USD, GBP/USD, USD/JPY and AUD/USD H4 UTC candles; both directions.
Read EMA, ADX, +DI and −DI only at completed H4 closes; load at least 150 bars.
The EMA-only result is retained as the required control sample.
Plot EMA(50) of close, Wilder ADX/DMI(14) and Wilder ATR(14).
Define a two-bar price boundary as the highest high or lowest low of the two bars preceding the signal bar.
Record EMA distance, ADX, +DI and −DI separately rather than calling all four independent votes.
Give every tool one job
Direction, timing, volatility and risk are different questions. This stack assigns them rather than asking one indicator to do everything.
Defines directional side and the early invalidation exit.
ADX gates trend strength while +DI/−DI supplies its associated direction; it is not the price trigger.
Supplies a completed price breakout trigger independent of indicator threshold crossing.
Scales candle, stop and gap rules.
- Long: completed close is above EMA(50), +DI is above −DI, ADX(14) is at least 25 and exceeds its previous-bar value; reverse price and DI for short.
- The signal candle closes beyond the frozen two-bar boundary in the eligible direction.
- Signal range is no greater than 1.75 × ATR(14), and at least 2R of room remains before the latest confirmed opposite obstacle.
Enter at the next H4 open after the eligible boundary close.
Stop 1.5 × ATR(14) from fill. Risk 0.50% equity and round down to 0.01 lot.
Take profit at 2R. Exit early at next open after a completed close crosses EMA(50) against the position.
Cancel when next-open gap exceeds 0.5 ATR, ADX/DI eligibility no longer holds before entry, the signal bar is oversized, or room-to-obstacle fails.
Use a constant 1.2-pip spread, 0.2-pip adverse slippage per fill, zero commission and 0.5 pip per rollover.
Move through the chart one decision at a time
- Bar −2: mark boundary
For a possible long, freeze the highest high of bars −3 and −2 at 1.0900.
- Bar −1: read direction
Close is above EMA(50), +DI is 27 versus −DI 18, and ADX rises from 24.6 to 25.4.
- Bar −1: confirm price
The candle closes at 1.0905 above the frozen boundary; range is 1.2 ATR and the room test passes.
- Bar 0: enter
Enter next open after costs, fix stop 1.5 ATR below fill, size 0.50% risk and place 2R.
- Bars +1 onward: hold
A falling ADX alone does not exit this canonical method. Only stop, 2R or a completed adverse EMA close applies.
- Control
Log the same signal using EMA plus price boundary without ADX/DMI so the filter's incremental effect can be measured.
A rejected example
Reject a bullish price break when ADX is 31 but +DI remains below −DI. High ADX describes strength, not automatically bullish direction.
Common variations
- Separate variant only: ADX crossing above 20 rather than level 25 and rising.
- Separate variant only: pullback trigger instead of two-bar breakout.
- Separate variant only: opposite DI cross exit.
Rebuild this method on the platform you use
The written rules work independently of the charting app. Match the same feed, timeframe, indicator settings and completed-candle timing before comparing results.
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Keep every test organised.
The CSV gives you one place to record the setup, costs, execution, outcome and whether you followed your rules.
Download test-plan CSV ↓